A mining code you can live by in DRC

By Gregory Mthembu-Salter in Kinshasa
Posted on Tuesday, 24 May 2016 12:23

Mines minister Martin Kabwelulu strode about this year’s Mining Indaba, which took place as usual in Cape Town in early February, with an unusually confident swagger.

I don’t know why I’ve stayed in position so long

True, a collapse in mining revenue has left a gaping hole in the government’s budget, but Kabwelulu was celebrating nine years in his position, making him the Democratic Republic of Congo’s (DRC) longest-serving cabinet minister. “I don’t know why I’ve stayed in position so long,” Kabwelulu said modestly, “but the fact that I have shows that we have stability in governance in our country.”

In an apparent stab at his host government, which had recently changed mines and finance ministers in controversial circumstances, Kabwelulu added: “We do not just change our ministers on a whim.”

Investors and mining companies at the Mining Indaba were eager to hear what exactly was going on with a drawn-out process the government launched in 2013 to review its mining code. The initial drafts of a revised code hiked taxes, increased the size of the stakes miners had to give the state in joint ventures, and reduced the time period before which the state could seek to amend contracts.

Companies reacted furiously in 2015, with Randgold leading the charge, saying that the proposed changes would choke off new investment and cost both the company and the country dearly.

The government initially stuck to its guns, but the drastic collapse in mineral commodity prices caused it to lose its nerve. The government then reduced the proposed increase in taxes, but the companies insisted it was not enough.

In late 2015, the draft of a new code made it through the council of ministers and to the national assembly, where it sits, we are told, with its mining sub-committee.

Joint ventures

The news Kabwelulu took to the Mining Indaba was that in the interim the old code would remain in force. His message was exactly what Randgold chief executive Mark Bristow, for one, had been wanting to hear.

On 19 January, Bristow reported that he had signed three joint-venture exploration agreements with junior miners that hold permits next to Randgold’s Kibali gold mine. The new joint ventures, Bristow said, more than double the size of Randgold’s holdings in the DRC.

Keeping the mining code as is will also benefit Toronto-listed Banro Corporation, the country’s only other industrial gold miner. Banro is in production at Twangiza in Sud-Kivu and at Namoya in Maniema Province and plans to start producing at two other sites: Lugushwa and Kamituga.

Both these sites, however, are the work sites of artisanal miners reluctant to move out, as well as numerous militiamen and soldiers who prey on the diggers and tax their meagre earnings.

Meanwhile, in the volatile Nord-Kivu Province territory of Walikale, Toronto-listed Alphamin is seeking to build an underground tin mine at Bisie.

Bisie, where the tin deposit reportedly runs hundreds of metres deep at eye-wateringly good grades, was notorious for years for its tens of thousands of artisanal miners and an endless procession of violent, rent-seeking military forces.

Today, however, most of the diggers have given up, in large part because of the fall in the tin price, making Bisie less interesting too for the soldiers and militiamen. In a major boost for the project, South Africa’s Industrial Development Corporation took a 15% stake in Alphamin in November 2015.

Down in the Copperbelt, miners are reeling from falls in the price of copper and cobalt. A further headache for miners there is the proliferation of disputes between the authorities of the new provinces of Haut Katanga and Lualaba, where their mining assets lie, about who gets to tax the companies and for what.

The provincial authorities are pushing for companies to pay both of them. The companies are resisting, and matters are already starting to get messy. ●

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